Question

The objective of capital reduction scheme is to write off?

Answer 1

Answer:

in order to pay off the unnecessary capital of the company which is of no use. in order to extinguish the liability against the unpaid shares of the company, in order to cancel paid up share capital which is unrepresented by the available assets.

Explanation:

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Answer 2

THE MOST COMMON OBJECTIVE OF CAPITAL REDUCTION SCHEME IS PAYMENT OF DIVIDENDS.

Explanation:

The other objectives of capital reduction schemes are:

1. Returning surplus capital: A company may have capital which is surplus to its requirements for the foreseeable future and which it may therefore wish to return to its shareholders.

2. Redeeming Shares: A company may wish to redeem its shares but it cannot do so if it has insufficient distributable reserves.

3. Distributing non- cash assets: A company may also use a capital reduction to transfer non-cash assets that it owns to its shareholders, although this is relatively unusual.

4. Structuring mergers and acquisitions as part of a scheme of arrangement: Capital reductions have become a popular method of structuring mergers and acquisitions or group restructurings.

5. Demergers: Capital reduction can be used to split one company's activities into different companies, called a demerger. Demergers are often used with the help of a scheme of arrangement.